Australian Competition & Consumer Commission v Tyco Australia Pty Ltd ACN 008 399 004 [2001] FCA 176 (28 February 2001)

Last Updated: 9 March 2001

FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v

Tyco Australia Pty Ltd ACN 008 399 004

[2001] FCA 176

TRADE PRACTICES - penalty and injunctive relief imposed for breach of s 45 Trade Practices Act 1974 (Cth) where breach acknowledged by respondents and joint submissions lodged

Trade Practices Act 1974 (Cth), s 45

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v TYCO AUSTRALIA PTY LTD (formerly Wormald Australia Pty Ltd) T/as Wormald Fire Systems ACN 008 399 004 AND ORS

Q 239 OF 1999

DRUMMOND J

28 FEBRUARY 2001

BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q 239 OF 1999

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant

AND:

TYCO AUSTRALIA PTY LTD (formerly Wormald Australia Pty Ltd) T/as Wormald Fire Systems ACN 008 399 004 First Respondent GRINNELL ASIA PACIFIC PTY LIMITED T/as O'Donnell Griffin ACN 003 905 093 Second Respondent FFE BUILDING SERVICES LTD (formerly Chubb Building Services Ltd) (formerly James Hardie Building Services P/L) T/as Fire Fighting Enterprises ACN 000 067 541 Third Respondent PATRICK FIRE PROTECTION PTY LTD ACN 010 592 999 Fourth Respondent INDEPENDENT FIRE SPRINKLERS PTY LTD ACN 009 976 854 Fifth Respondent INDEPENDENT FIRE ALARMS PTY LTD ACN 009 705 720 Sixth Respondent ALLFIRE SYSTEMS PTY LTD ACN 010 713 149 Seventh Respondent THE ASSET GROUP (BRISBANE) PTY LTD (formerly Asset Fire and Security Pty Ltd) ACN 061 327 786 Eighth Respondent ASSOCIATED FIRE SYSTEMS PTY LTD ACN 010 404 770 Ninth Respondent ENTERPRISE FIRE PROTECTION PTY LTD ACN 010 595 212 Tenth Respondent ENTERPRISE FIRE PROTECTION ELECTRICS PTY LTD ACN 069 159 744 Eleventh Respondent FIREVAC PTY LTD ACN 010 607 379 Twelfth Respondent IMPACT FIRE PROTECTION PTY LTD ACN 006 615 452 Thirteenth Respondent PREMIER FIRE PROTECTION (QLD) PTY LTD ACN 050 410 636 Fourteenth Respondent TRIDENT FIRE PROTECTION PTY LTD ACN 010 243 811 Fifteenth Respondent SENSOR SYSTEMS (AUST) PTY LTD ACN 065 444 368 Sixteenth Respondent F & H PTY LTD (formerly Matthews Fire Alarm Pty Ltd) ACN 009 659 410 Seventeenth Respondent BURMESS PTY LTD T/as BEI Services ACN 010 623 677 Eighteenth Respondent RICHARD McCORMACK Nineteenth Respondent KENNETH EDWIN WALLER Twentieth Respondent KEVIN FISHER Twenty-First Respondent MATTHEW SPROULE Twenty-Second Respondent TERENCE MICHAEL McDONALD Twenty-Third Respondent RAYMOND EDWARD KING Twenty-Fourth Respondent MICHAEL JOHN LEWIS Twenty-Fifth Respondent DAVID JAMES CROSBY Twenty-Sixth Respondent TREVOR PATRICK Twenty-Seventh Respondent DEREK COOPER Twenty-Eighth Respondent ALEXANDER ROBERT THOMSON Twenty-Ninth Respondent GORDON EDMUND DAY Thirtieth Respondent ALLAN GEOFFREY MURRELL Thirty-First Respondent KERRY JOHN MOULDS Thirty-Second Respondent KEVYN RAYMOND ALLEN Thirty-Third Respondent JOHN EDMUND BARNEY Thirty-Fourth Respondent BRIAN GEOFFREY DAVIES Thirty-Fifth Respondent DAVID WELLMAND DOUYERE Thirty-Sixth Respondent DAVID WILLIAM KEMP Thirty-Seventh Respondent LESLIE JOHN BAILEY Thirty-Eighth Respondent EDWARD PETER GOLEMBA Thirty-Ninth Respondent MICHAEL WILD Fortieth Respondent STEVEN WALTER SPURR Forty-First Respondent CLINT LAWRENCE PRICKETT Forty-Second Respondent IAN JAMES TAYLOR Forty-Third Respondent WILLIAM JOHN LYNCH Forty-Fourth Respondent BRIAN GRAHAM STARKEY Forty-Fifth Respondent KENNETH BRIAN THOMSON Forty-Sixth Respondent EON WILLIAM RADLEY Forty-Seventh Respondent GREGORY JOHN BOURKE Forty-Eighth Respondent JOHN FRANKLIN PREECE Forty-Ninth Respondent ROY ERNEST TESCH Fiftieth Respondent DENNIS BRETT Fifty-First Respondent NIGEL STEPHEN REHBOCK Fifty-Second Respondent KENNETH NORMAN ROSE Fifty-Third Respondent NOEL ANTHONY MEYER Fifty-Fourth Respondent WILLIAM FRANCIS SHEEHAN Fifty-Fifth Respondent ALAN JOHN BLUNDELL Fifty-Sixth Respondent CHUBB AUSTRALIA LIMITED Fifty-Seventh Respondent CHUBB AUSTRALIA LIMITED First Cross-Claimant DIETOOL (WA) PTY LIMITED First Cross-Respondent JAMES HARDIE INDUSTRIES LIMITED Second Cross-Respondent

JUDGE:	DRUMMOND J
DATE OF ORDER:	28 FEBRUARY 2001
WHERE MADE:	BRISBANE

THE COURT NOTES THAT:

A. The fourteenth and forty-eighth respondents have given, and the applicant has accepted, an undertaking pursuant to s 87B of the Trade Practices Act 1974 (Cth) to implement a trade practices compliance program in a form acceptable to the applicant.

THE COURT ORDERS THAT:

1. In respect of its contraventions of ss 45(2)(a)(ii) and 45(2)(b)(ii) of the Trade Practices Act 1974 (Cth), and of its ancillary involvement in contraventions of those sections, alleged in paragraph 135 of the statement of claim, a penalty in respect of all contraventions which occurred after 30 September 1993 of $420,000 be imposed upon the fourteenth respondent.

2. In respect of his ancillary involvement in the contraventions by the fourteenth respondent of ss 45(2)(a)(ii) and 45(2)(b)(ii) of the Trade Practices Act 1974 (Cth) alleged in paragraph 169 of the statement of claim, a penalty in respect of all contraventions which occurred after 30 September 1993 of $65,000 be imposed upon the forty-eighth respondent.

3. The penalty of the fourteenth respondent is to be paid to the Commonwealth of Australia as follows:

(a) the sum of $90,000 on or before 6 February 2002;

(b) the further sum of $45,000 on or before 6 August 2002;

(c) the further sum of $45,000 on or before 6 February 2003;

(d) the further sum of $45,000 on or before 6 August 2003;

(e) the further sum of $45,000 on or before 6 February 2004;

(f) the further sum of $45,000 on or before 6 August 2004;

(g) the further sum of $45,000 on or before 6 February 2005;

(h) the further sum of $45,000 on or before 6 August 2005;

(i) the further sum of $15,000 on or before 6 February 2006;

(j) if any instalment is not paid on or before the due date then the entire balance of the penalty of $420,000 then unpaid becomes immediately due and payable.

4. The penalty of the forty-eighth respondent is to be paid to the Commonwealth of Australia as follows:

(a) the sum of $7,000 on or before 6 February 2002;

(b) the further sum of $3,500 on or before 6 August 2002;

(c) the further sum of $3,500 on or before 6 February 2003;

(d) the further sum of $3,500 on or before 6 August 2003;

(e) the further sum of $3,500 on or before 6 February 2004;

(f) the further sum of $3,500 on or before 6 August 2004;

(g) the further sum of $3,500 on or before 6 February 2005;

(h) the further sum of $3,500 on or before 6 August 2005;

(i) the further sum of $33,500 on or before 6 February 2006;

(j) if any instalment is not paid on or before the due date then the entire balance of the penalty of $65,000 then unpaid becomes immediately due and payable.

AND THE COURT ORDERS BY CONSENT OF THE APPLICANT, FOURTEENTH RESPONDENT AND FORTY-EIGHTH RESPONDENT THAT:

5. The fourteenth respondent be restrained, in Queensland and the Northern Territory, for a period of three years, whether by its directors, servants, agents, or otherwise howsoever, from making, arriving at or giving effect to any contract or arrangement or understanding (other than an agreement to jointly tender for the provision of the services referred to in subparagraph (a) hereof; an agreement with a related entity; or an agreement in so far as it relates to the licensing or assignment of a trademark, patent, registered design, copyright or EL rights within the meaning of the Circuit Layouts Act 1989 (Cth)) which contains a provision that:

(a) has the purpose or effect or likely effect, whether by itself or together with another provision of any contract, arrangement or understanding to which the fourteenth respondent is a party, that:

(i) the fourteenth respondent will not compete with another provider of fire sprinkler system installation services for the provision of those services to a particular person or class of persons; or

(ii) the fourteenth respondent will allow another provider of fire sprinkler system installation services to win any tender let by a third person for the provision of such services; or

(iii) another provider of fire sprinkler system installation services will allow the fourteenth respondent to win any tender let by a third person for the provision of such services; or

(b) has the purpose or effect or likely effect of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices charged for fire sprinkler system installation services supplied or offered for supply by any of the parties to the contract, arrangement or understanding in competition with one another to other persons.

6. The fourteenth respondent be restrained, in Queensland and the Northern Territory, for a period of three years, whether by its directors, servants, agents or otherwise howsoever, from making, arriving at or giving effect to any contract or arrangement or understanding (other than an agreement to jointly tender for the provision of the services referred to in subparagraph (a) hereof; an agreement with a related entity; or an agreement in so far as it relates to the licensing or assignment of a trademark, patent, registered design, copyright or EL rights within the meaning of the Circuit Layouts Act 1989 (Cth)) which contains a provision that:

(a) has the purpose or effect or likely effect, whether by itself or together with another provision of any contract, arrangement or understanding to which the fourteenth respondent is a party, that

(i) the fourteenth respondent will not compete with another provider of fire alarm system installation services for the provision of those services to a particular person or class of persons; or

(ii) the fourteenth respondent will allow another provider of fire alarm system installation services to win any tender let by a third person for the provision of such services; or

(iii) another provider of fire alarm system installation services will allow the fourteenth respondent to win any tender let by a third person for the provision of such services; or

(b) has the purpose or effect or likely effect of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices charged for fire alarm system installation services supplied or offered for supply by any of the parties to the contract, arrangement or understanding in competition with one another to other persons.

7. The forty-eighth respondent be restrained, in Queensland and the Northern Territory, for a period of three years, from:

(i) being directly or indirectly knowingly concerned in or party to;

(ii) inducing or attempting to induce; or

(iii) aiding, abetting, counselling or procuring;

the making of, or arriving at, or giving effect to, by a corporation providing fire sprinkler system installation services, of any contract or arrangement or understanding (other than an agreement to jointly tender for the provision of the services referred to in subparagraph (a) hereof; an agreement with a related entity; or an agreement in so far as it relates to the licensing or assignment of a trademark, patent, registered design, copyright or EL rights within the meaning of the Circuit Layouts Act 1989 (Cth)) which contains a provision that:

(a) has the purpose or effect or likely effect that:

(i) that corporation will not compete with another provider of fire sprinkler system installation services for the provision of those services to a particular person or class of persons; or

(ii) that corporation will allow another provider of fire sprinkler system installation services to win any tender let by a third person for the provision of such services; or

(iii) another provider of fire sprinkler system installation services will allow that corporation to win any tender let by a third person for the provision of such services; or

(b) has the purpose or effect or likely effect of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices charged for fire sprinkler system installation services supplied or offered for supply by any of the parties to the contract, arrangement or understanding in competition with one another to other persons.

8. The forty-eighth respondent be restrained, in Queensland and the Northern Territory, for a period of three years, from:

(i) being directly or indirectly knowingly concerned in or party to;

(ii) inducing or attempting to induce; or

(iii) aiding, abetting, counselling or procuring;

the making of, or arriving at, or giving effect to, by a corporation providing fire alarm system installation services, of any contract or arrangement or understanding (other than an agreement to jointly tender for the provision of the services referred to in subparagraph (a) hereof; an agreement with a related entity; or an agreement in so far as it relates to the licensing or assignment of a trademark, patent, registered design, copyright or EL rights within the meaning of the Circuit Layouts Act 1989 (Cth)) which contains a provision that:

(a) has the purpose or effect or likely effect that:

(i) that corporation will not compete with another provider of fire alarm system installation services for the provision of those services to a particular person or class of persons; or

(ii) that corporation will allow another provider of fire alarm system installation services to win any tender let by a third person for the provision of such services; or

(iii) another provider of fire alarm system installation services will allow that corporation to win any tender let by a third person for the provision of such services; or

(b) has the purpose or effect or likely effect of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices charged for fire alarm system installation services supplied or offered for supply by any of the parties to the contract, arrangement or understanding in competition with one another to other persons.

9. The fourteenth respondent pay the applicant's costs of and incidental to these proceedings in the agreed amount of $35,000 within fourteen days of the date of this order.

10. The affidavit of Gregory John Bourke filed 19 January 2001 be placed in a sealed envelope and not be opened without the leave of a judge of the Court.

THE COURT FURTHER ORDERS THAT:

11. In respect of his ancillary involvement in the contraventions by the third respondent of ss 45(2)(a)(ii) and 45(2)(b)(ii) of the Trade Practices Act 1974 (Cth) alleged in paragraph 144 of the statement of claim, a penalty in respect of all contraventions of $50,000 be imposed upon the twenty-third respondent.

12. The penalty of the twenty-third respondent is to be paid to the Commonwealth of Australia as follows:

(a) the sum of $1,000 within twenty-eight days of the date of this order;

(b) the further sum of $7,000 on or before 26 February 2002;

(c) the further sum of $7,000 on or before 26 August 2002;

(d) the further sum of $7,000 on or before 26 February 2003;

(e) the further sum of $7,000 on or before 26 August 2003;

(f) the further sum of $7,000 on or before 26 February 2004;

(g) the further sum of $7,000 on or before 26 August 2004;

(h) the further sum of $7,000 on or before 26 February 2005;

provided that if any instalment is not paid on or before the due date then the entire balance of the penalty of $50,000 then unpaid becomes immediately due and payable.

THE COURT ORDERS BY CONSENT OF THE APPLICANT AND THE TWENTY-THIRD RESPONDENT THAT:

13. The twenty-third respondent be restrained, in New South Wales and Queensland, for a period of three years, from:

(i) being directly or indirectly knowingly concerned in or party to;

(ii) inducing or attempting to induce; or

(iii) aiding, abetting, counselling or procuring;

the making of, or arriving at, or giving effect to, by a corporation providing fire sprinkler system installation services, of any contract or arrangement or understanding (other than an agreement to jointly tender for the provision of the services referred to in subparagraph (a) hereof; an agreement with a related entity; or an agreement in so far as it relates to the licensing or assignment of a trademark, patent, registered design, copyright or EL rights within the meaning of the Circuit Layouts Act 1989 (Cth)) which contains a provision that:

(a) has the purpose or effect or likely effect that:

(i) that corporation will not compete with another provider of fire sprinkler system installation services for the provision of those services to a particular person or class of persons; or

(ii) that corporation will allow another provider of fire sprinkler system installation services to win any tender let by a third person for the provision of such services; or

(iii) another provider of fire sprinkler system installation services will allow that corporation to win any tender let by a third person for the provision of such services; or

(b) has the purpose or effect or likely effect of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices charged for fire sprinkler system installation services supplied or offered for supply by any of the parties to the contract, arrangement or understanding in competition with one another to other persons.

14. The twenty-third respondent be restrained, in New South Wales and Queensland, for a period of three years, from:

(i) being directly or indirectly knowingly concerned in or party to;

(ii) inducing or attempting to induce; or

(iii) aiding, abetting, counselling or procuring;

the making of, or arriving at, or giving effect to, by a corporation providing fire alarm system installation services, of any contract or arrangement or understanding (other than an agreement to jointly tender for the provision of the services referred to in subparagraph (a) hereof; an agreement with a related entity; or an agreement in so far as it relates to the licensing or assignment of a trademark, patent, registered design, copyright or EL rights within the meaning of the Circuit Layouts Act 1989 (Cth)) which contains a provision that:

(a) has the purpose or effect or likely effect that:

(i) that corporation will not compete with another provider of fire alarm system installation services for the provision of those services to a particular person or class of persons; or

(ii) that corporation will allow another provider of fire alarm system installation services to win any tender let by a third person for the provision of such services; or

(iii) another provider of fire alarm system installation services will allow that corporation to win any tender let by a third person for the provision of such services; or

(b) has the purpose or effect or likely effect of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices charged for fire alarm system installation services supplied or offered for supply by any of the parties to the contract, arrangement or understanding in competition with one another to other persons.

15. The twenty-third respondent pay the applicant's costs of and incidental to these proceedings in the agreed amount of $20,000, to be paid within twenty-eight days of the date of this order.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q 239 OF 1999

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant

AND:

TYCO AUSTRALIA PTY LTD (formerly Wormald Australia Pty Ltd) T/as Wormald Fire Systems ACN 008 399 004 First Respondent GRINNELL ASIA PACIFIC PTY LIMITED T/as O'Donnell Griffin ACN 003 905 093 Second Respondent FFE BUILDING SERVICES LTD (formerly Chubb Building Services Ltd) (formerly James Hardie Building Services P/L) T/as Fire Fighting Enterprises ACN 000 067 541 Third Respondent PATRICK FIRE PROTECTION PTY LTD ACN 010 592 999 Fourth Respondent INDEPENDENT FIRE SPRINKLERS PTY LTD ACN 009 976 854 Fifth Respondent INDEPENDENT FIRE ALARMS PTY LTD ACN 009 705 720 Sixth Respondent ALLFIRE SYSTEMS PTY LTD ACN 010 713 149 Seventh Respondent THE ASSET GROUP (BRISBANE) PTY LTD (formerly Asset Fire and Security Pty Ltd) ACN 061 327 786 Eighth Respondent ASSOCIATED FIRE SYSTEMS PTY LTD ACN 010 404 770 Ninth Respondent ENTERPRISE FIRE PROTECTION PTY LTD ACN 010 595 212 Tenth Respondent ENTERPRISE FIRE PROTECTION ELECTRICS PTY LTD ACN 069 159 744 Eleventh Respondent FIREVAC PTY LTD ACN 010 607 379 Twelfth Respondent IMPACT FIRE PROTECTION PTY LTD ACN 006 615 452 Thirteenth Respondent PREMIER FIRE PROTECTION (QLD) PTY LTD ACN 050 410 636 Fourteenth Respondent TRIDENT FIRE PROTECTION PTY LTD ACN 010 243 811 Fifteenth Respondent SENSOR SYSTEMS (AUST) PTY LTD ACN 065 444 368 Sixteenth Respondent F & H PTY LTD (formerly Matthews Fire Alarm Pty Ltd) ACN 009 659 410 Seventeenth Respondent BURMESS PTY LTD T/as BEI Services ACN 010 623 677 Eighteenth Respondent RICHARD McCORMACK Nineteenth Respondent KENNETH EDWIN WALLER Twentieth Respondent KEVIN FISHER Twenty-First Respondent MATTHEW SPROULE Twenty-Second Respondent TERENCE MICHAEL McDONALD Twenty-Third Respondent RAYMOND EDWARD KING Twenty-Fourth Respondent MICHAEL JOHN LEWIS Twenty-Fifth Respondent DAVID JAMES CROSBY Twenty-Sixth Respondent TREVOR PATRICK Twenty-Seventh Respondent DEREK COOPER Twenty-Eighth Respondent ALEXANDER ROBERT THOMSON Twenty-Ninth Respondent GORDON EDMUND DAY Thirtieth Respondent ALLAN GEOFFREY MURRELL Thirty-First Respondent KERRY JOHN MOULDS Thirty-Second Respondent KEVYN RAYMOND ALLEN Thirty-Third Respondent JOHN EDMUND BARNEY Thirty-Fourth Respondent BRIAN GEOFFREY DAVIES Thirty-Fifth Respondent DAVID WELLMAND DOUYERE Thirty-Sixth Respondent DAVID WILLIAM KEMP Thirty-Seventh Respondent LESLIE JOHN BAILEY Thirty-Eighth Respondent EDWARD PETER GOLEMBA Thirty-Ninth Respondent MICHAEL WILD Fortieth Respondent STEVEN WALTER SPURR Forty-First Respondent CLINT LAWRENCE PRICKETT Forty-Second Respondent IAN JAMES TAYLOR Forty-Third Respondent WILLIAM JOHN LYNCH Forty-Fourth Respondent BRIAN GRAHAM STARKEY Forty-Fifth Respondent KENNETH BRIAN THOMSON Forty-Sixth Respondent EON WILLIAM RADLEY Forty-Seventh Respondent GREGORY JOHN BOURKE Forty-Eighth Respondent JOHN FRANKLIN PREECE Forty-Ninth Respondent ROY ERNEST TESCH Fiftieth Respondent DENNIS BRETT Fifty-First Respondent NIGEL STEPHEN REHBOCK Fifty-Second Respondent KENNETH NORMAN ROSE Fifty-Third Respondent NOEL ANTHONY MEYER Fifty-Fourth Respondent WILLIAM FRANCIS SHEEHAN Fifty-Fifth Respondent ALAN JOHN BLUNDELL Fifty-Sixth Respondent CHUBB AUSTRALIA LIMITED Fifty-Seventh Respondent CHUBB AUSTRALIA LIMITED First Cross-Claimant DIETOOL (WA) PTY LIMITED First Cross-Respondent JAMES HARDIE INDUSTRIES LIMITED Second Cross-Respondent

JUDGE:	DRUMMOND J
DATE:	28 FEBRUARY 2001
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1 The background to the applications involving the fourteenth  and forty-eighth  respondents, Premier Fire Protection (Qld) Pty Ltd ("Premier"), and its director, Mr Bourke, have been dealt with at some length in the judgment that I gave on 22 March 2000 in these proceedings as between the Australian Competition and Consumer Commission ("the Commission") and Tyco Australia Pty Ltd. Premier was a participant in both the sprinkler market in South East Queensland and Northern New South Wales and the fire alarm market in South East Queensland, in the first case in the period October 1993 to May 1997, and in the second case the period June 1992 to December 1995. Mr Bourke is the Managing Director and a shareholder of Premier.

2 Mr Bourke, on Premier's behalf, attended many meetings held in relation to the competitive arrangements that were put in place in both markets. In the sprinkler market, Premier was allocated and won at least eight projects as a result of its involvement in the arrangements in question. In the alarm market, it was allocated and won at least eleven projects as a result of its involvement in the anti-competitive arrangements in that market. Premier is described as a mid-size competitor in both markets, having about 6 per cent of the sprinkler market and about 10 per cent of the alarm market. The penalties proposed for Premier, $420,000, and for Mr Bourke, $65,000, are, as I say, within the proper range.

3 I have looked at the minutes of orders proposed and I am prepared to make orders in terms of annexure 1 to the supplementary joint submissions, which I will make exhibit 1 in the proceedings between the Commission and the fourteenth and forty-eighth respondents.

4 Mr McDonald, the twenty-third respondent, is the last of the respondents in proceedings brought by the Commission last year against all the major participants in the fire alarm and sprinkler markets in South East Queensland and Northern New South Wales. Those participants and a large number of senior executives of each have been dealt with in the course of the past twelve months.

5 Mr McDonald, very recently, entered into negotiations with the Commission that have led to him agreeing to withdraw his defence; the hearing was set down some time ago and was due to start today.

6 Mr McDonald was the National General Manager, Fire and Safety Products of FFE Building Services Ltd ("FFE Building Services"). FFE Building Services was the largest participant in both markets. It attracted the heaviest fine imposed of any of the respondents, $5,000,000. Mr McDonald held this position, however, only for a short period, approximately nine months from January 1995 to mid-October 1995.

7 In this period his subordinates, Mr Lewis, the twenty-fifth respondent, Mr King, the twenty-fourth respondent, and Mr Crosby, the twenty-sixth respondent, were active participants in meetings between those engaged in the anti-competitive arrangements. They had, for some considerable time prior to Mr McDonald taking up his position as National General Manager, been engaged in that conduct. I should say that Mr Crosby was very much a subordinate player in the arrangements, acting under the directions of Mr King and Mr Lewis.

8 Mr McDonald soon became aware of what was going on in the sense that he soon learned that Mr Lewis and Mr King were engaged in these anti-competitive meetings which were productive of considerable financial benefits to their employing company, FFE Building Services. On the material before me, Mr McDonald informed Mr Lewis and Mr King of his disapproval of what they were doing. But that is as far as he went.

9 He was in a position of such seniority and such authority that he could readily have brought their activities to an end. But he allowed them to continue notwithstanding expressing disapproval to Mr Lewis and Mr King. The inference is that he must have perceived that there was likely to be some personal benefit to him as National General Manager in his career with FFE Building Services from allowing the activities to continue and to generate profits for FFE Building Services that it might well not have made but for its anti-competitive conduct.

10 His expression of disapproval really reveals little more in the circumstances than an awareness of the illegality of what was going on by his subordinates.

11 It is proposed now at this late stage that Mr McDonald be visited with a penalty of $50,000 in respect of his involvement in the anti-competitive arrangements, to be paid by a series of payments, the last to be made in February 2005. In addition, he is, by agreement, to pay the Commission's costs of the proceedings involving him to be fixed at $20,000 and that amount is to be paid practically straight away.

12 Mr Lewis received a penalty of $70,000 and Mr King a penalty of $35,000. As I have said, FFE Building Services attracted the largest penalty imposed of $5,000,000. In my opinion, notwithstanding the weight that I must attach to the fact that the Commission, as the responsible regulator, has decided to agree a penalty at a particular level, the penalty proposed for Mr McDonald would be too light, but for the one circumstance of his own personal financial position.

13 I have what is described as a confidential affidavit by Mr McDonald. It deals at some considerable length with his financial position, the position of his wife and also his own state of health. I have refused to make a confidentiality order in respect of this affidavit. It will be open to public inspection. I think it is important that this material be available to the public so that they will understand why the Court has departed, to an extent, from the scale of penalties imposed on other less senior executives involved in this conduct and has let Mr McDonald off in a way which might be thought to be rather light.

14 The information as to Mr McDonald's state of health, which is bound up with what seems to be his very diminished earning capacity and generally his far from affluent financial circumstances, is one consideration sufficient to persuade me that I should make the orders proposed by consent. I will therefore make orders in terms of pars 1 to 4 of annexure A to the joint submissions, which I will mark in the proceedings between the Commission and Mr McDonald as exhibit 2.

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Drummond.

Associate:

Dated: 6 March 2001

Counsel for the Applicant:	Mr S Couper QC and Mr KN Wilson
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Fourteenth and Forty-Eighth Respondents:	Mr J Logan SC
Solicitor for the Fourteenth and Forty-Eighth Respondents:	O'Reilly & Lillicrap
Counsel for the Twenty-Third Respondent:	Mr JV Nicholas
Solicitor for the Twenty-Third Respondent:	Tress Cocks & Maddox, Lawyers
Date of Hearing:	28 February 2001
Date of Judgment:	28 February 2001